A day after US President Barack Obama reiterated his plans for creating new jobs, amid rising double-digit unemployment in the US, India’s nearly $60-billion outsourcing industry remained hopeful that its top export market will continue to grow with more companies seeking to cut costs by outsourcing work to low-cost locations.
On Wednesday, Mr Obama vowed in his first State of the Union speech that he will make creation of local jobs his top priority in 2010, and hinted that his government could end tax breaks for companies creating jobs overseas.
This is not the first instance of Mr Obama upping his anti-outsourcing rhetoric. In May last year, he had said American companies’ shipping jobs overseas will be required to pay more taxes, and that tax-deferral benefits for such companies will be ended. “It’s a tax code that says you should pay lower taxes, if you create a job in Bangalore, India, than if you create one in Buffalo, New York,” Mr Obama had said.
Som Mittal, president of Nasscom, the country’s association of software exporters, said Mr Obama has several short- and long-term pressures to cope with, but that does not mean any significant impact for the outsourcing industry. “We will be their solution and not the problem,” he said in an interview.
The proposed ‘jobs bill’, which is aimed at creating more local employment in the US, is focused at reviving manufacturing, retail and construction jobs. Last year, Mr Obama had suggested that his government would end tax incentives for American companies creating jobs overseas by removing ‘deferred tax’ on foreign income for these companies. However, no specific proposal has been brought forward to outline the execution of this move.
